What is the differance between Linking and Appending an external blend?
The difference is simple.

Link: Link copies the object from the blend file, much like Alt-D does for meshes. When it is pulled in, the mesh/material whatever cannot be edited in the file. Changes in the original file will cross apply to it every where. This is useful for production assets which need to be the same in ever shot.

Append:
The object will be copied into the new file, there will be no link, much like importing an .obj or .fbx